Action brought on 7 September 2007 - Chupa Chups SA v Commission of the European Communities

(Case T-331/07)

Language of the case: Spanish

Parties

Applicant: Chupa Chups, SA (Barcelona, Spain) (represented by: Ramón Falcón Tella, lawyer)

Defendant: Commission of the European Communities

Form of order sought

Annul Article 1(2) of the decision adopted by the Commission declaring incompatible with the common market regional aid to the amount of EUR 800 000, granted in 2003 under the 'Minería 2' programme, and declaring consequently that that aid may not be implemented;

Alternatively, annul the last sentence of Article 1(2) of the decision, according to which ' this part of the aid may accordingly not be implemented';

In either case, order the Commission to pay the costs.

Pleas in law and main arguments

The contested decision regards as incompatible with the common market regional aid to the amount of EUR 800 000, granted in 2003 under the 'Minería 2' programme, previously authorised by the Commission. The contested decision considers that the applicant was not eligible for aid within that programme since firms in difficulty are excluded from it.

In support of its claims, the applicant accuses the Commission of a manifest error of assessment and of infringement of the principle of protection of legitimate expectations.

As regards the factual inaccuracies and the error of assessment by the Commission, the applicant claims that 2002 was the first year in which losses were recorded, and that in announcing the aid, the national authorities could not have been aware of those losses, given that the accounts had not been approved.

Further, the applicant submits that the firm cannot be regarded as a firm in difficulty within the meaning of paragraph 5(a) of the Community Guidelines on state aid for rescuing and restructuring firms in difficulty, which provides that a firm is regarded as being in difficulty if it has lost half of its registered capital and a quarter of that capital has been lost over the preceding 12 months. The Commission makes a manifest error of assessment in that, in order to calculate the percentage represented by the losses and to determine if those affect the capital, it has not taken into account the legal and voluntary reserves which the company had, which were of an amount more than sufficient to cover all the losses.

It was the firm itself, with its own resources and those contributed by creditors and private banks, which overcame the loss-making situation, and accordingly the firm cannot be regarded as a firm in difficulty, under paragraph 4 of the Community Guidelines on state aid for rescuing and restructuring firms in difficulty, which defines firms in difficulty as those which are unable to overcome such a situation without outside assistance.

Nor did there occur the signs referred to in paragraph 6 of the guidelines, since the losses did not increase, but decreased. The stock inventories are not growing but diminishing. The debt did not mount, but declined. And the interest charges did not rise, but significantly fell between 2002 and 2003.

The applicant also claims that the prohibition at issue from making payment of the aid of EUR 800 000, granted in 2003 within a programme of regional aid approved by the Commission, infringes the principle of protection of legitimate expectations.

On that point, it is asserted that the prohibition of actual payment of the aid has the same negative effect on the firm's balance sheet of profits and losses as a decision ordering repayment, with the sole difference that in the present case no interest payments are incurred.

The aid was approved by the Commission and Chupa Chups had no reason to believe that it was not eligible for that aid. If the regional aid had not existed, decisions on investment might have been different.

____________